ELV
ELV
Hold 2026-03-15
Model
DCF
Price at Report
$291.63
Base IV
$394.28
Bear IV
$225.70
Bull IV
$606.06
Entry Zone: 237-363 · Sell Above: 515
Bore Family Office
Valuation Report — Elevance Health (ELV) • March 15, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 9.50% • Current Price: $291.63
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Elevance Health, Inc. (formerly Anthem) is one of the largest managed care organizations in the United States, serving approximately 47 million medical members through commercial insurance, Medicare Advantage, and Medicaid managed care contracts. The company operates through its BlueCross BlueShield-licensed plans across 14 states and through CareMark-affiliate Carelon, a growing health services platform that provides pharmacy benefits, behavioral health, and clinical management across the enterprise and externally.
ELV has suffered a significant valuation de-rating in 2024-2026 due to elevated medical loss ratios (MLR) driven by pent-up utilization post-COVID, Medicaid redetermination headwinds, and higher-than-expected Medicare Advantage costs. The stock has fallen ~40% from its 2024 highs. Analyst consensus remains strongly bullish (+31.5% consensus upside), viewing the elevated MLR as cyclical/transient rather than structural, with normalization expected through 2026-2027. The 15-year dividend growth streak and low 27% payout ratio underscore balance sheet stability.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Commercial & Specialty | $88,200M | 45% | +5.0% | — | Employer-sponsored, individual, and small group plans |
| Government (Medicare/Medicaid) | $91,400M | 46% | +22.0% | — | Medicare Advantage, Medicaid managed care; high MLR segment |
| Carelon (Health Services) | $18,000M | 9% | +15.0% | — | PBM, behavioral health, clinical management — fastest growing |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $136,943 | $155,660 | $170,209 | $175,204 | $197,584 |
| EBITDA ($M) | $-7,498 | $-8,509 | $-11,080 | $-11,197 | $-12,668 |
| Operating Income ($M) | $8,800 | $10,184 | $12,473 | $12,743 | $14,413 |
| Net Income ($M) | $6,158 | $5,894 | $5,987 | $5,980 | $5,662 |
| EPS (diluted) | $24.95 | $24.28 | $25.22 | $25.68 | $25.21 |
| Free Cash Flow ($M) | $7,277 | $7,247 | $6,765 | $4,552 | $3,174 |
| Annual DPS | $4.520 | $5.120 | $5.920 | $6.520 | $6.840 |
| Total Debt ($M) | $23,031 | $24,114 | $25,120 | $31,232 | $32,046 |
| Rev YoY Growth | — | +13.7% | +9.3% | +2.9% | +12.8% |
| EBITDA Margin | -5.5% | -5.5% | -6.5% | -6.4% | -6.4% |
| Operating Margin | 6.4% | 6.5% | 7.3% | 7.3% | 7.3% |
| Net Margin | 4.5% | 3.8% | 3.5% | 3.4% | 2.9% |
📈 DCF Scenarios
$226
🔴 Bear
$394
📊 Base
$606
🚀 Bull
$291.63
Current Price
$384
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.5% | 2.5% | 2.0% | 9.50% | $226 | ▼22.6% |
| 📊 Base | 13.0% | 7.5% | 2.5% | 9.50% | $394 | ▲35.2% |
| 🚀 Bull | 20.0% | 11.0% | 3.0% | 9.50% | $606 | ▲107.8% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.5% | Stage 2: 2.5% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.29B | $3.00B | $3.00B |
| Year 2 | Stage 1 | $3.40B | $2.84B | $5.84B |
| Year 3 | Stage 1 | $3.52B | $2.68B | $8.52B |
| Year 4 | Stage 1 | $3.64B | $2.53B | $11.05B |
| Year 5 | Stage 1 | $3.77B | $2.39B | $13.44B |
| Year 6 | Stage 2 | $3.86B | $2.24B | $15.69B |
| Year 7 | Stage 2 | $3.96B | $2.10B | $17.78B |
| Year 8 | Stage 2 | $4.06B | $1.96B | $19.75B |
| Year 9 | Stage 2 | $4.16B | $1.84B | $21.59B |
| Year 10 | Stage 2 | $4.27B | $1.72B | $23.31B |
| Terminal | — | TV=$58.0B | PV(TV)=$23.4B (50% of EV) | EV=$46.7B |
Base Scenario
Stage 1: 13.0% | Stage 2: 7.5% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.59B | $3.28B | $3.28B |
| Year 2 | Stage 1 | $4.05B | $3.38B | $6.66B |
| Year 3 | Stage 1 | $4.58B | $3.49B | $10.14B |
| Year 4 | Stage 1 | $5.18B | $3.60B | $13.74B |
| Year 5 | Stage 1 | $5.85B | $3.71B | $17.46B |
| Year 6 | Stage 2 | $6.29B | $3.65B | $21.11B |
| Year 7 | Stage 2 | $6.76B | $3.58B | $24.69B |
| Year 8 | Stage 2 | $7.26B | $3.51B | $28.20B |
| Year 9 | Stage 2 | $7.81B | $3.45B | $31.65B |
| Year 10 | Stage 2 | $8.40B | $3.39B | $35.04B |
| Terminal | — | TV=$122.9B | PV(TV)=$49.6B (59% of EV) | EV=$84.6B |
Bull Scenario
Stage 1: 20.0% | Stage 2: 11.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.81B | $3.48B | $3.48B |
| Year 2 | Stage 1 | $4.57B | $3.81B | $7.29B |
| Year 3 | Stage 1 | $5.48B | $4.18B | $11.47B |
| Year 4 | Stage 1 | $6.58B | $4.58B | $16.05B |
| Year 5 | Stage 1 | $7.90B | $5.02B | $21.06B |
| Year 6 | Stage 2 | $8.77B | $5.09B | $26.15B |
| Year 7 | Stage 2 | $9.73B | $5.16B | $31.30B |
| Year 8 | Stage 2 | $10.80B | $5.23B | $36.53B |
| Year 9 | Stage 2 | $11.99B | $5.30B | $41.83B |
| Year 10 | Stage 2 | $13.31B | $5.37B | $47.20B |
| Terminal | — | TV=$210.9B | PV(TV)=$85.1B (64% of EV) | EV=$132.3B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.5% | $497 | $526 | $562 | $605 | $659 |
| 8.0% | $456 | $480 | $508 | $542 | $584 |
| 8.5% | $421 | $441 | $464 | $491 | $524 |
| 9.0% | $391 | $407 | $426 | $448 | $474 |
| 9.5% | $365 | $379 | $394 | $412 | $434 |
| 10.0% | $342 | $353 | $367 | $382 | $399 |
| 10.5% | $321 | $331 | $342 | $355 | $370 |
| 11.0% | $303 | $312 | $321 | $332 | $344 |
| 11.5% | $287 | $294 | $302 | $311 | $322 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (Fwd) | P/FCF | MLR | Div Yield | MA Exposure |
|---|---|---|---|---|---|
| ELV (Current) | 11.2x | 20.6x | 88.5% | 2.4% | High |
| UNH (UnitedHealth) | 17.2x | 19.4x | 85.5% | 1.8% | High |
| CVS (CVS Health) | 9.8x | 11.2x | 87.8% | 4.2% | Medium |
| CI (Cigna) | 11.5x | 12.3x | 86.2% | 1.8% | Low |
| HUM (Humana) | 13.1x | 22.5x | 89.1% | 1.3% | Very High |
| MCO Managed Care Avg | 12.6x | 17.1x | 87.4% | 2.3% | — |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $6.880 |
| Current Yield | 2.36% |
| Consecutive Growth Years | 15 |
| 1-yr DPS CAGR | +3.8% |
| 3-yr DPS CAGR | +5.7% |
| 5-yr DPS CAGR | +8.8% |
| 10-yr DPS CAGR | +11.5% |
| Payout Ratio (DPS/EPS) | 27.2% |
| FCF Payout Ratio | 48.8% |
| Sustainability Verdict | Safe |
ELV's dividend is extremely well-covered. Payout ratio is only 27% of EPS. Even at the depressed FY2025 FCF of $3.17B, FCF payout is 49% — sustainable. At normalized FCF of ~$6B, payout would be ~26%. 15-year consecutive growth streak; dividend has grown at 8.8% CAGR over 5 years. The 27% payout leaves enormous room for continued dividend growth and buybacks simultaneously. No risk of dividend cut unless FCF falls below $1.5B, which would require catastrophic MLR deterioration.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $24.95 | — | — | — | Actual |
| 2022 | $24.28 | — | — | — | Actual |
| 2023 | $25.22 | — | — | — | Actual |
| 2024 | $25.68 | — | — | — | Actual |
| 2025 | $25.21 | — | — | — | Actual |
| 2026 | $24.99 | $26.15 | $29.42 | 25 | Estimate |
| 2027 | $27.81 | $29.52 | $33.62 | 22 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $136943.0B | — | — | — | Actual |
| 2022 | $155660.0B | — | — | — | Actual |
| 2023 | $170209.0B | — | — | — | Actual |
| 2024 | $175204.0B | — | — | — | Actual |
| 2025 | $197584.0B | — | — | — | Actual |
| 2026 | $183300.0B | $195930.0B | $218000.0B | 25 | Estimate |
| 2027 | $190400.0B | $202000.0B | $229700.0B | 22 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $383.65 | Range $297–$485
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Lisa Gill | JP Morgan | Buy | $397 | +36.1% |
| Andrew Mok | Barclays | Buy | $393 | +34.8% |
| Stephen Baxter | Wells Fargo | Buy | $391 | +34.1% |
| David Macdonald | Truist Securities | Strong Buy | $390 | +33.7% |
| Ann Hynes | Mizuho | Buy | $350 | +20.0% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 2025 | $5.46 vs $5.39 | +$0.07 ✅ | $48900.0B vs $48300.0B | +$600.0B ✅ | 2026 EPS guided $26+, MLR improving |
| Q3 2025 | $6.02 vs $5.95 | +$0.07 ✅ | $48200.0B vs $47800.0B | +$400.0B ✅ | Carelon growth strong |
| Q2 2025 | $6.33 vs $6.25 | +$0.08 ✅ | $49600.0B vs $49100.0B | +$500.0B ✅ | MLR guidance tightened |
| Q1 2025 | $7.40 vs $7.22 | +$0.18 ✅ | $50900.0B vs $50200.0B | +$700.0B ✅ | Full-year maintained |
(e) Confidence Band Commentary
ELV has 17 active Buy/Strong Buy ratings with zero Sells — the entire Street is bullish despite the selloff. The wide estimate range ($24.99–$29.42 for 2026 EPS) reflects genuine uncertainty about MLR normalization timing. ELV consistently beats EPS estimates by 1-2%, suggesting management is successfully managing costs even in a difficult MLR environment. The bear case ($297 PT) is essentially the current price — implying very limited downside risk per analyst models. The average $384 PT represents a 31.5% return from current levels. FY2026 is the pivotal year: if MLR improves as management guided, estimates will be revised higher and the stock will re-rate toward 14-15× forward earnings.
💡 Investment Thesis
- Deep value vs. history: ELV trades at 11.2× forward EPS — near a 10-year low (historical range 12–18×). The selloff reflects MLR cyclicality, not a structural impairment of the franchise. 17 out of 17 covering analysts remain Buy/Strong Buy. Consensus price target implies 31.5% upside.
- MLR normalization is the thesis: Medical cost inflation is cyclical. ELV is implementing aggressive benefit redesigns, network repricing, and utilization management for 2026. Every 100bps of MLR improvement translates to ~$800M in additional operating income — a direct FCF recovery lever.
- Carelon is a hidden growth engine: The Carelon pharmacy/health services platform generated ~$18B in revenue (+15% YoY) and is expanding into external markets. As Carelon scales, it reduces dependence on insurance cycle earnings and commands higher P/E multiples. UnitedHealth's Optum model shows the value this creates.
- Buybacks + dividend at historically low prices: ELV reduced share count 3.6% in 2025. At $291/share vs. $483 average cost basis, buybacks at current prices are highly accretive. 15-year dividend growth streak with 27% payout = enormous buffer.
- Medicare Advantage headwinds are already priced in: 2026 CMS rate updates were negative, but the market has fully repriced this. Managed care names that survive MLR cycles historically re-rate sharply when margins recover.
⚖️ DCF Verdict: Hold — Elevance Health (ELV)
Current price: $291.63 | Analyst Avg PT: $383.65
$226
🔴 Bear
$394
📊 Base
$606
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$363 | Begin position |
| Tier 2 — Add | ≤$310 | Add on weakness |
| Tier 3 — Full | ≤$237 | Full allocation |
| Sell Alert | ≥$515 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate — this is a high-conviction recovery play at extreme valuation. Base DCF intrinsic value of $394 implies 35% upside from $291. The 17-analyst consensus with average PT of $383 and no Sell ratings confirms the Street views this as cyclical distress, not structural impairment.
Start accumulating the existing position at current levels ($285-295). The existing position at $482.60 cost is underwater — dollar-cost averaging here reduces the blended cost toward $350-360 range. Becomes a Strong Buy if ELV pulls back to $260 (near Bear IV). Thesis is broken if MLR does not normalize in 2026 and FCF remains at or below $3.5B — reassess at that point.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 16.7 |
| Average Cost Basis | $482.60 |
| Current Market Value | $4,870 |
| Unrealized P&L | $-3,189 (-39.6%) |
| Annual DPS | $6.880/yr |
| Annual Dividend Income | $115/yr |
| Current Yield (at price) | 2.36% |
| Yield on Cost | 1.43% |
| vs Target (~$200K) | $4,870 / $200,000 (2%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | DCF (FCFF @ WACC) chosen for diversified managed care company. ELV is categorized as Growth/Diversified Healthcare — DCF is the appropriate model. DDM would anchor to the $6.88 DPS with 27% payout, significantly understating the company's distributable FCF capacity of ~$6B+ normalized. |
| WACC Build | β=1.35 (managed care elevated — Medicare/Medicaid policy risk, MLR volatility, CMS rate uncertainty). Ke = 4.30% + 1.35×5.50% = 11.725%. Kd = 5.0%×(1-0.22) = 3.9%. Market cap = $291.63×225M = $65.6B; Debt = $32B; We=67.2%, Wd=32.8%. WACC = 0.672×11.725% + 0.328×3.9% = 7.88% + 1.28% = 9.16%. Rounded to 9.5% to reflect elevated policy uncertainty under current healthcare reform discussions. |
| FCF Base | Using FY2025 FCF of $3.17B as base year — this is the trough. Recovery modeled via high Stage 1 growth rates: Bear 3.5%, Base 13%, Bull 20%. Base 13% growth from depressed trough recovers to ~$5.8B FCF by year 5 (FY2030), in line with analyst FY2027 EPS consensus of $29.52 at ~25% FCF margins. |
| Sanity Check | Base IV $394.28 vs analyst consensus PT $383.65 = +2.8% divergence — within ±20% threshold. Current price $291.63 = 26% below Base IV, suggesting meaningful undervaluation. The bear scenario at $225.70 implies ~$260 PT (slightly above the lowest analyst PT of $297). |
| EBITDA Note | Stockanalysis shows negative EBITDA for ELV — this is a data artifact of how managed care income statements are structured. Operating income (adding back SG&A and D&A) is properly positive ($14.4B in FY2025). EBITDA for managed care should be calculated as: Net Income + Taxes + Interest + D&A (excludes benefit expense from cost structure). |
| MLR Context | Medical Loss Ratio (MLR) = medical costs / premiums. ELV's consolidated MLR rose to ~88.5% in 2025 from ~86% historically. Every 100bps of MLR improvement on ~$175B premium revenue = $1.75B pre-tax income improvement. Management has guided toward MLR normalization in 2026. This is the single most important variable for ELV's FCF recovery. |
| Net Cash | ELV has net cash of $4.07B ($4.1B cash + $26.6B ST investments vs $32B total debt). This adds $18/share to equity value in the DCF, partially offsetting the depressed FCF base. The strong balance sheet enables continued buybacks even during the FCF trough. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.